Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ajanta Pharma Ltd (BOM:532331, Financial) reported a 20% year-over-year increase in revenue for Q4 FY24, reaching INR1,054 crore.
- EBITDA for Q4 FY24 surged by 86% to INR278 crore, with an EBITDA margin of 26%.
- Profit after tax (PAT) for Q4 FY24 increased by 66% to INR203 crore.
- The company announced a buyback of equity shares at INR2,770 per share, with a total payout of INR351 crore.
- Ajanta Pharma Ltd (BOM:532331) achieved a cash conversion ratio of 67% and distributed INR642 crore as dividends, reflecting strong shareholder returns.
Negative Points
- The company faced technical issues during the earnings call, causing delays in uploading the list of highlights.
- Despite strong performance, the EBITDA margin guidance for FY25 remains flat at 28%, indicating potential cost pressures.
- The Red Sea crisis has increased transit times and freight costs, impacting operational efficiency.
- Price erosion in the US market remains a concern, with an estimated 8-10% decline for existing products.
- The institutional business in Africa is unpredictable and heavily reliant on procurement agency schedules, making future performance uncertain.
Q & A Highlights
Q: What factors will drive the anticipated mid-teens growth in the antibiotic market for FY25, and are there any risks from Red Sea disturbances?
A: The growth is expected from increasing market share, new product launches, and field size expansion, particularly in international markets. The Red Sea disturbances have increased transit times and freight costs, but corrective measures have been taken to mitigate these impacts.
Q: What is the guidance for the India market for FY25?
A: Ajanta Pharma aims to grow 200-300 basis points faster than the Indian Pharmaceutical Market (IPM), which is forecasted to grow at 8%. This translates to a projected growth rate of 10-11% for Ajanta Pharma in India.
Q: How will the Red Sea issue and other factors impact margins in FY25?
A: The Red Sea issue is expected to increase costs by approximately INR30 crore. Despite this, Ajanta Pharma aims to maintain an EBITDA margin of 28%. If conditions improve, there is potential for a 100 basis point improvement.
Q: What is the outlook for price erosion in the US market, and how does it affect guidance?
A: Price erosion in the US is expected to be in the high single digits (8-10%). Ajanta Pharma plans to launch six new products in FY25, with most approvals expected in Q3 and Q4. The guidance is conservative, factoring in potential price erosion and approval timelines.
Q: Can Ajanta Pharma return to the high margins seen in FY21?
A: The high margins in FY21 were an aberration due to reduced expenses during COVID-19. The company aims to sustain an EBITDA margin of 28% going forward, with potential for slight improvement if conditions remain favorable.
Q: What is the strategy for the India business in FY25?
A: Ajanta Pharma aims to grow faster than the therapeutic segments in which it operates, with a focus on dermatology, ophthalmology, and cardiology. The company does not plan to enter new therapeutic segments in the current year.
Q: How is the trade generics segment performing in India?
A: The trade generics segment is growing rapidly, with Ajanta Pharma scaling its business significantly over the past five years. The segment is expected to grow at or slightly above the IPM growth rate.
Q: What is the outlook for the Institutional business in FY25?
A: The Institutional business is unpredictable and depends on global buyer funds and malaria outbreaks. FY24 saw good performance due to high procurement and efficient supply chain execution. The outlook for FY25 is flattish or slightly positive.
Q: How are API prices trending, and what is the outlook?
A: API prices have stabilized after significant increases post-COVID. The current levels are expected to sustain, barring any major disruptions.
Q: What is the strategy for expanding the sales force in international markets?
A: Ajanta Pharma plans to add 3-4% more Medical Representatives (MRs) in international markets, focusing on existing strong markets like Africa and Asia.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
